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    Published on: April 20, 2007

    The Wall Street Journal reports this morning that “retail executives and major investors say Wal-Mart, which has a market value of just under $200 billion, needs to take some significant steps to regain its status as a growth stock.” Noting that “Wal-Mart's share price this decade is off 30% compared with a gain of 24.4% in the Dow Jones Wilshire Retail Index,” the Journal suggests various scenarios:

    • “Peter Sorrentino, a senior portfolio manager at Huntington Asset Advisors, which has $9 billion under management and owns 2.3 million Wal-Mart shares, says it is time for a pullback in the U.S. for the retailer. Wal-Mart has been ‘too focused on growth in units and not enough on the core business,’ Mr. Sorrentino says. ‘They lost their way.’”

    • Several analysts believe that Wal-Mart should rid itself of Seiyu, the Japanese retailer in which it has a majority ownership. And, interestingly enough, there are some suggestions that a few analysts believe that Wal-Mart may be close to such a decision….though Seiyu would probably go for the equivalent of $1.16 billion, and it may be tough to find a buyer.

    However, analysts also seem to feel that once Wal-Mart sells Seiyu, it should take the money and invest in one of the world’s emerging markets.

    • Spinning off Sam’s Club is mentioned by analysts as an option that could generate a lot of money for Wal-Mart and raise the company’s stock price.
    KC's View:
    The question that Wal-Mart needs to answer – and perhaps it already has, since it hasn’t done any of these things – is whether such moves would have a short-term impact but hurt the company long-term.

    We are reminded of the Biblical passage:

    “For what does it profit a man to gain the whole world, and forfeit his soul?” (Mark 8:36)

    Published on: April 20, 2007

    The Kroger Co. announced yesterday that it will acquire 18 Scott’s Food & Pharmacy stores in northeast Indiana from Supervalu. Terms of the deal were not disclosed.

    The stores reportedly will continue operations under the Scott's banner and become part of Kroger's Central division, based in Indianapolis. The division currently operates 145 stores under the Kroger, Hilander, Owen's and Pay Less banners in parts of Indiana, Illinois, Michigan, Missouri and Ohio.
    KC's View:

    Published on: April 20, 2007

    In the UK, the Retail Bulletin reports that Sainsbury is introducing a program called “Make A Difference Days,” designed to use one day per month to encourage “positive action and change across a range of environmental and ethical issues.”

    Case in point: On Friday, April 27 – the first day of the promotion – Sainsbury will distribute free-of-charge reusable shopping bags. As many as seven million bags that normally would be sold for the equivalent of about 20 cents apiece will be given away.
    KC's View:
    This harkens back to the story we had a week or two ago about consumers who increasingly who like to shop at companies – such as Whole Foods and Starbucks – that they perceive as being politically correct. The advantage of the Sainsbury program, it seems to us, is that a) it has a tangible benefit to consumers, and b) has a level of continuity that could work really well for the chain.

    Published on: April 20, 2007

    Bloomberg reports that despite the fact that Wal-Mart’s sales in 2006 grew at its slowest pace in two decades, CEO Lee Scott did pretty well. Scott, according to Bloomberg, “received a salary of $1.3 million and stock valued at $15.3 million, Wal-Mart said yesterday in a regulatory filing. The company, based in Bentonville, Ark., also awarded him bonuses of $4.29 million and $8.08 million in stock options.” Scott’s total compensation for 2006: $29.7 million.

    While that’s a lot of money, Bloomberg points out that it is less than the $36.4 million made by Target CEO Robert J. Ulrich. Target last year had a 16 percent increase in income last year.
    KC's View:

    Published on: April 20, 2007

    The South Florida Sun-Sentinel reports that “Macy's plans to introduce its own brand of quick-serve eateries and restaurants by world-famous chefs Wolfgang Puck and Todd English to Florida stores as a part of a national expansion project.” Called Macy’s Taste Bars, the operations will include soups, salads, sandwiches, as well as gelato and coffee.

    According to the story, “Taking a page from luxury department stores such as Neiman Marcus and Nordstrom, Macy's has tried to appeal to upscale customers by expanding its relationships with designer brands. Adding gourmet eateries is another sign the retailer is trying to compete.”
    KC's View:
    Hope it works out better than the EatZi’s that Macy’s operated in New York a number of years ago.

    Published on: April 20, 2007

    • New York-based D’Agostino Supermarkets announced that it will launch a new e-commerce site beginning on May 15, and that it is using MyWebGrocer as its website and online marketing partner.
    KC's View:

    Published on: April 20, 2007

    • The Federal Trade Commission (FTC) has made a second request to the Great Atlantic & Pacific Tea Co. (A&P) for information related to its proposed $679 million acquisition of Pathmark Stores.

    • Kmart reportedly has launched something called The Caregivers Marketplace, which offers cash rebates on brand name health care products to family caregivers.

    “The typical family caregiver is a woman over the age of 45 who is handling family and work responsibilities in addition to her caregiving responsibilities," said Gail Hunt, president and CEO, National Alliance for Caregiving. "We see The Caregivers Marketplace as helping caregivers with one small piece of that potentially huge financial responsibility they may be facing."

    • The New York Times reports this morning that hundreds of dairy farmers across the country are rushing to switch to become certified organic milk producers before more stringent regulations take effect later this year – to the point that there is expected to be a glut of organic milk, which is a turnaround from the usual and chronic shortage of organic milk.

    USA Today reports that melamine, “a nitrogen-rich chemical used to make plastic and sometimes as a fertilizer may have been deliberately added to an ingredient in pet food that has sickened and killed cats and dogs across the country, public and private officials say. A leading theory is that it was added to fake higher protein levels.”

    However, the US Food and Drug Administration (FDA) doesn’t know how the melamine got into the pet food, whether it might have been deliberate, and has not been able to get invitations to the Chinese factories to allow its inspectors to investigate the facilities.

    • Seattle-based Associated Grocers and Sabey Corporation announce that their sale/leaseback agreement, made in principle in February this year, for AG’s 55.27 acre Seattle headquarters and distribution facility has been finalized and closed. Terms of the sale leaseback include a $91 million sale price and up to a four-year leaseback of the property.
    KC's View:

    Published on: April 20, 2007

    • Supervalu announced that its fourth quarter profit was $119 million, compared with a profit of $6 million during the same period a year ago. The whopping increase was attributed to the company’s acquisition of Albertsons. Q4 sales more than doubled to $10.3 billion from $4.6 billion last year.

    For the full year, Supervalu reported net sales of $37.4 billion, compared with $19.9 billion in 2006. In 2007, the company earned $452 million, or $2.32 a share, compared to $206 million, or $1.46 a share.

    • The Great Atlantic & Pacific Tea Co. (A&P) reported that its fourth quarter net income was $1.7 million, up from a loss of $14.6 million during the same period a year ago. Sales for the period were up 0.6 percent to $1.08 billion.

    Sales for the fiscal year were $4.06 billion, flat as compared with fiscal 2005’s $3.93 billion when adjusted for 52 weeks. Same-store sales increased by 0.4 percent for the year.
    KC's View:

    Published on: April 20, 2007

    • The Grocery Manufacturers Association (GMA) has appointed Michael J. McShane to the newly created position of vice president of political affairs. McShane, who has Capital Hill and White House experience, most recently served as vice president of government relations for SmithBucklin, the association management company.
    KC's View:

    Published on: April 20, 2007

    Helen Walton, the widow of Wal-Mart founder Sam Walton, died yesterday at age 87 of natural causes.
    KC's View:

    Published on: April 20, 2007

    Got the following email about the call by New York and Illinois officials – responsible for ownership of Wal-Mart stocks in pension funds - for an federal investigation of Wal-Mart’s alleged surveillance of dissident shareholder groups:

    One has to wonder why you have to check your brain at the door when entering public service. If the Comptroller in New and Chicago were regular investors and thought a stock was in trouble for this or that---just sell it. Stocks go up and down all the time. But I guess since we embrace, "It wasn't my fault but so-and-so's". You bought the stock with expectation of appreciation and dividends or some combination. If you made a bad pick, sell it and move on; but it looks better for you if you can blame the company instead of yourself. After all, every big company is a huge rip-off to working families.

    Wal-Mart should hire one of the fired U.S. Attorneys to investigate the matter thoroughly; take corrective actions, then go private through an ESOP program. Then in sense the employees could nominally be in charge and rectify all the bad things wrong the UFCW and others complain about. Kill a flock of birds with just a couple of stones.

    Just a thought.

    And, regarding the continuing debate about deposed Wal-Mart marketing executive Julie Roehm, MNB user Patrick Snyder wrote:

    Seems to me like everything I’ve read had Julie trying to do it “her way” before she even tried to learn about Wal-Mart and the WM way.

    They didn’t get as big as they are overnight and certainly didn’t get to be #1 on Fortune 500 list by being stupid.

    Perhaps Julie should have practiced one of the 7 habits of highly Effective people---

    “Seek first to understand before you seek to be understood.”

    I don’t think painting your office pink on the first week of work says you are willing to listen?

    Just my take…

    Unless, of course, her mandate was to push and pull the company into new directions, and a pink office was meant to be a metaphor for something else.

    On the subject of nurturing management talent, one MNB user wrote:

    I do feel the need to give some praise to the company I work for. While I can't speak directly to official management training (managers being those that make 60k+) I am impressed with the training and opportunities given to employees who may or may not ever enter that range. Our company always tries hard to look internally to fill open positions, usually only turning outside when particular skills cannot be found. They also take a great deal of time to encourage their managers to talk with employees and work on development plans. Many, many people move from store to store, department to department, and even store to corporate to store, in order to learn as many facets of the business as they can; all in the effort to help them understand the business as a whole, and not just be isolated in their own little niche area. Another example of their commitment to employees at all levels, not just the high earners, is their special relationship with the Dale Carnegie franchise. Most of the people they send make in the 20-50k a year range. They send so many people through that program (which is great by the way) that they have a whole class dedicated to just our folks. On average there are about 35 people per class, and 4-5 classes per year, for a total of about 150 a year. That is a lot of people, and at about $1600 a person a lot of money.

    This company talks all the time about how much they value their employees, and they do a wonderful job of living up to their words. They are all about differentiating themselves (as you so relentlessly advocate), not just in what they offer their customers but also what they offer their employees. This is one of many reasons why this company continues to grow rapidly and win industry, customer and employee plaudits (I'll let you guess as to which Northeast regional grocer I'm referring to).

    Regarding the childhood obesity issue, MNB user David Farnam wrote:

    I grew up in the generation of kids that have parents that lived through the depression with the mindset of eat everything on your plate…it may not be there tomorrow. God bless my fabulous parents but I still fight those demons. I still can’t eat at an all-you-can-eat place without overeating and now totally avoid them.

    As foster parents we learned that kids eat what’s in front of them. We had to learn that if they don’t like it and won’t eat that it’s probably ok, they won’t starve. Of course we had to stick with it and complaints of hunger later were met with you should have eaten your dinner. Picky eaters just went hungry at our house and were ok with that knowing it was healthier for them. We made our mistakes as well…Chicken Picata with a lemon caper sauce was too much for a 3 and 6 year old’s palate. “Dat Sauwa!” is a reaction we still laugh about. Those little troopers suffered through it for strawberry shortcake. Glad we had desert that night.

    I guess I’m saying it’s all about the parenting. Sure it’s never been tougher what with all the advertising, prepared meals, snacks, and time constraints. It might be time to give the Twinkies a time out. Better yet ban them from the house along with the soda, snacks, and cookies. They can’t eat them if they aren’t around but of course you can’t either.

    Another MNB user recalled:

    In my first job I worked for a public relations company which had Wheaties as an account. Wheaties/General Mills fully embraced "The President's Council on Physical Fitness" which was a Federal program (voluntary) to encourage kids to exercise more. It was very effective.

    The focus on getting kids off their duffs and outside exercising their muscles (for increased mental and physical fitness) is not new. We Baby Boomers needed a little prodding too.

    Finally, we wrote yesterday about how our daughter’s second-favorite fast food joint is Chipotle…and that her first is Walter’s Hot Dogs in Mamaroneck, New York.

    Which prompted MNB user Joe Fraioli to write:

    I am a big fan of Chipotle and was happy to see it in your headlines this morning. However I am from Mamaroneck NY and love Walter’s as well so now that I live in Phoenix you have made this day a long one as I think about the hotdogs.

    For those of you who are also Walter’s fans and have moved away, you can order their mustard in a bottle to use at home, it is not the same but it helps.

    Nothing better.

    KC's View:

    Published on: April 20, 2007

    Next week, it is expected that the governor of Wisconsin will sign a bill that will make it possible for supermarkets and liquor stores to hand out free beer samples of not more than six ounces. This puts beer on a par with wine, samples of which already can be given out.

    What is remarkable is that it has taken so long for Wisconsin to enact such legislation.

    I mean, it’s Wisconsin. Isn’t that almost the place where beer was invented?

    This got me thinking…

    When I was attending Loyola Marymount University in Los Angeles back in the late seventies (just imagine me with curly hair down to his shoulders, wearing shorts and Hawaiian shirts and, of course, pukka shells), I spent a good part of my senior year working for a winery tasting room in Marina del Rey. Brookside Winery. Great place. No longer in business. (As a matter of fact, none of the retailers where I worked my way through high school and college are in business anymore. I like to think of this as just an unfortunate coincidence.)

    Now, one of the great advantages of this job was that I got to drink with the customers, which may explain why I don’t remember as much about wine as I should. But I’ve never forgotten the essence of the experience, and it has partly informed my view of retailing for all these years. The whole point of the tasting room is summed up this way:

    A person walks into the winery. Says he or she is having lamb and couscous (or whatever) for dinner, and needs a wine. He or she goes back to the tasting room, samples a few to see what works, makes a choice, buys the wine, and leaves. With any luck, he or she repeats the experience. Often.

    Isn’t what the retailing experience is supposed to be like? Creating connections with customers with both the product (in this case, the wine) and the personnel (me)?

    Retailing with personality.

    It doesn’t seem like rocket science, but much of US retailing would suggest that maybe it is.

    Here’s my favorite headline of the week (from USA Today) that I didn’t get a chance to use on MNB, though I would have if I could have figured out an excuse:


    It doesn’t get any better than that.

    Don’t know about you, but I am loving the final season of ‘The Sopranos.” The first episode was a little strange and moody, but last Sunday’s was extraordinary – full of foreboding and metaphor and darkness. With its echoes at the end of “The Godfather,” and the strong suggestion that a bloodbath is coming, the show is building toward its finale with real power and momentum. “The Sopranos” is a real wow.

    Not so much is the current season of “24,” which I am sort of watching out of habit and expectation that, as in past seasons, I am going to be enthralled by some plot point or twist. But it hasn’t happened yet, and in some ways the new season seems to be a “best of” revisiting of plot twists done better in earlier seasons. It is hard to maintain quality and live up to expectations for six years, and “24” may simply be showing its age with an off-year. I’ll stay with it, but they need to do better.

    On the other hand, I can’t wait for ‘Heroes” to start again – it has been off the air for far too long, and so far has been the new show that has most intrigued me and captured my imagination.

    (I know it seems like I watch way too much television, but in my defense I never, ever watch so-called “reality television.” Everything I know about “American Idol” I learn from listening to Tony Kornheiser…because this way I can keep up with this new cultural force without actually having to watch it, plus Kornheiser is funny beyond words.)

    Yesterday’s obituaries for Kitty Carlisle Hart noted that, in addition to being a well-known panelist on television game shows back in the fifties and sixties, she was married to playwright Moss Hart, was in the 1936 Marx Brothers movie “A Night At The Opera,” and was a vocal champion of the arts and tireless performer until her death this week at age 96.

    And all I could think was, “Now, that’s a life.”

    I think that there’s a national tour of “Spamalot” making its way around the country, and while I must admit that I’ve not seen its version of the Tony Award-winning musical “lovingly ripped off” from the movie “Monty Python and the Holy Grail,” I can tell you that it is about as much fun as you can have at the theater…tunes you can hum, and jokes you’ll revisit over and over afterwards. I know this because last night, I took Mrs. Content Guy and the Content Kids to the Broadway version, which I first saw in previews last year. And I enjoyed it every bit as much.

    I love live theater. Always have, going back to when I was an acting student in the early seventies. (Before my winery days.) I love dramas, I love comedies, I love musicals (except those by Andrew Lloyd Webber). I think that’s part of the reason I love really good retail – at its best, it has a kind of theatricality.

    Last night, leaving the theater, Mrs. Content Guy said she couldn’t imagine having to do the same show over and over, eight times a week.

    I looked at her and said, quite seriously, that I can’t imagine a better life.

    Not that my life is anything to complain about. Next week, I hit the road again…first to Miami Beach, where I’ll be speaking at the Food Marketing Institute (FMI) Advertising Marketing Executive Conference, and then to Oslo, Norway, for a gig at the Spar International Human Resources Conference.

    I probably won’t break into song. But then again, I may.

    That’s it for this week.

    Have a great weekend.

    KC's View: